Banks ending loans to property investors
In a note issued late last month, the State Bank of Vietnam said lenders may not offer commercial home loans to investors at rates higher than 10.5 percent per year. As for first homebuyers, or those need of a house for living, commercial banks can lend them at higher rates as this would be considered consumer lending.
Commercial banks typically do not delineate the homebuyers’ purpose as they consider all property loans consumer loans. They increased consumer lending after the central bank removed the ceiling interest rate on consumer loans in February, allowing them to set the rate higher than the rate cap, now 10.5 percent.
One joint-stock bank executive who wished not to be named said it was riskier to lend to property investors than to lend other businesses. So he said his bank would not maintain offer loans to property investors so long as it was forced to keep the rate under the cap.
An official from the central bank who wanted to go unnamed said the central bank wanted to discourage property lending and prevent commercial banks from pouring money into real estate speculation as Vietnam should focus on loans for production and trading.
A deputy general director of a large joint-stock bank in Ho Chi Minh City who spoke on condition of anonymity said most of people engaged in property loans were investors, not genuine homebuyers.
The central bank has yet to announce whether or not it would ask commercial lenders to retroact the interest rate on property loans signed by investors since February.
